Legal Question in Real Estate Law in Illinois
Legal obligations when co-signing a bank loan
When co-signing on a bank loan for real estate for 3 years and then a balloon payment is due at the end of that time, what is the legal obligation of the co-signer at that time? Does the co-signer have to remain on the loan if it's then extended or can the co-signer's name come off the loan without damaging their own credit?
1 Answer from Attorneys
Re: Legal obligations when co-signing a bank loan
The legal obligation of the co-signer is completed at the end of the balloon, provided the loan is paid in full. The co-signer would not be obligated to sign a new note if the previous loan was not paid in full. The problem is, probably neither of the parties is in a position to pay the loan off, and the co-signer is on the hook until the loan in paid.
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